1===+1. What is important in a capital increase where each shareholder takes his proportionate share of the issue?
1===+2. What is dilution of control?
1===+3. When are there three different measures of dilution of control? What are they?
1===+4. What is the purpose of subscription rights? What is their theoretical value?
1===+5. At what price is a capital increase effected when made with an issue of subscription rights? When made without?
1===+6. How can a company be sold by means of a capital increase?
1===+7. What is the consequence of a capital increase on EPS in the short term? In the long term?
1===+8. Should there be an issue of new shares whenever the share price is overvalued?
1===+9. Why are the most profitable companies the ones that gain the most by issuing new shares?
1===+10. Does a capital increase with pre-emptive subscription rights signal overvaluation of the shares more strongly than one without?
1===+11. What can happen if rights trade significantly below their theoretical price? What is the limit?
1===+12. Why are share issues a complex decision to take for family-owned companies?
1===+1.

a. A company has a market value of €100m divided into 1 million shares. It proposes to raise funds equivalent to 25% of its value by issuing new shares at €75. Calculate the value of the subscription right, the apparent, technical and real dilutions, the adjustment coefficient and the subscription ratio.
1===+b. A shareholder holds 90 shares of the company above. Show the bonus share aspect inherent in a capital increase of this kind.
1===+c. If the shareholder does not subscribe to the new issue, what is his new ownership percentage? Calculate it in two different ways.
1===+d. Show that if all shareholders subscribe to the capital increase, the issue price does not matter.
1===+e. What is EPS after the capital increase if previously it was €10?
1===+f. If the book value of equity was €80m before the capital increase, what is the percentage increase in it? What is the book value per share before the operation? What is it after the operation?
1===+g. Answer questions

(a) through

(f) again assuming that, after a sharp run-up in share prices, the market value of the company has doubled. The amount of the capital increase is still €25m, but the issue price rises to €150. What conclusions do you draw?
1===+2. Case study: Deutsche Bank share issue in June 2014.
Issue of 299.8m new shares, or 5 new for every 18 shares held, with pre-emptive subscription rights:
Number of shares before the capital increase: 1079.4m Issue price: €22.5 Latest price: €28.71 Issue proceeds (gross): €6.7bn 1===+a. Compare consolidated shareholders’ equity (€55bn) with the amount of the capital increase, the amount of the latter to market capitalisation before the operation. What do you conclude?
1===+b. Calculate the real dilution entailed by the capital increase.
1===+c. Calculate the share that new shareholders will hold in the capital and the shareholders’ equity of Deutsche Bank.
1===+d. What is your conclusion?
1===+1. What is the point of backing a loan with an asset?
1===+2. What are the main restrictions on issuing bonds on the market?
1===+3. Why could it be a good thing for a group to issue bonds?
1===+4. What is the point of using subordination when raising financing?
1===+5. When should a treasurer be more inclined to use market products?
1===+6. What is a covenant? Provide a theoretical example of the usefulness of covenants.
1===+7. Is a covenant more of an obstacle to doing or a clause that encourages discussion among the creditors?
1===+8. What is the negative side effect of backing up a financing with an asset?
1===+9. Are there more covenants in a bond loan than in a bank loan?
Why?
1===+10. Why do companies keep cash on their balance sheets?
1===+11. A treasurer has to invest cash, but over a period of two years.
Should he opt for a fixed or a floating rate? Why?
1===+12. What is the treasurer who takes out debt over five years at a fixed rate betting on? Why?
1===+13. How are reasoning in terms of value and reasoning in terms of cost on the income statement in opposition to each other with regard to the choice of a fixed or a floating rate for debt?
1===+14. What is the limit on the amount of cash that should be kept on the balance sheet?
1===+15. Is it a bad thing to renegotiate debt?
1===+16. Is it more complicated to renegotiate bond debt than to renegotiate bank debts? Why?
1===+17. Does diversifying sources of financing by debt come without cost for the company? Should it be avoided? Why? 

1===+1. In January 2009, Saint-Gobain issued €700m in bonds, maturing in July 2014, with a coupon of 8.25% and repayment at par. In October 2010, Saint-Gobain offered to exchange these bonds issued in 2009 for new bonds, at the market rate of the time for this level of risk, i.e. 4%, maturing in October 2018.
1===+a. In October 2010, was the Saint-Gobain January 2009-
8.25% bond listed above, below or at a par? Why?
1===+b. Conceptually, what is the difference between the price of the January 2009-8.25% bond in October 2010 and its face value, given the interest rates applicable at that time for a borrower like Saint-Gobain over a residual period of nearly four years?
1===+c. On what condition could the bearers of the January 2009-
8.25% bond agree to exchange it for the October 2010-4%
bond?
1===+d. If Saint-Gobain succeeds in exchanging 100% of its January 2009-8.25% bonds for October 2010-4% bonds, can you say that from October 2010 to July 2014 (i.e. the residual life of the January 2009-8.25% bond) SaintGobain got an interest rate of 4% on this initial debt of €700m? Why?
1===+e. On what condition could you say that Saint-Gobain would enjoy, all in all, a cost of debt reduced to 4% from October 2010 to July 2014 on the €700m borrowed? Does this seem realistic to you? Why?
1===+f. What is the cost for Saint-Gobain of the October 2010-4%
bond from July 2014 to October 2018, i.e. beyond the life of the January 2009-8.25% bond?
1===+g. What are the two main advantages that explain why, in 2010, a large number of groups such as Saint-Gobain offered to exchange their bonds issued in 2009?
1===+1. How should an internet-of-things start-up be financed? And a pizza chain?
1===+2. What is an optimistic entrepreneur? What are the conclusions to be drawn?
1===+3. What is the counterpart of goodwill paid at the outset for a start-up?
1===+4. What are the advantages of the venture capital method for valuing a company that is in the process of starting up?
1===+5. What are the drawbacks of the venture capital method for valuing a company that is in the process of starting up?
1===+6. Why are discount rates required by investors in start-ups so high?
1===+7. Why are discount rates required by investors in start-ups rarely reached?
1===+8. Why do entrepreneurs accept very high rates of return required by investors?
1===+9. What is a business plan that eventually corresponds to reality?
1===+10. How many months can a company that only has €450 000 in cash left survive if its monthly consumption is €90 000? Is it time to launch the next round of financing?
1===+1. An investor proposes to contribute €1m to a start-up and to obtain 20% of its capital. What is the pre-money and postmoney valuation of this company?
1===+2. A start-up is financed using €1m. The entrepreneur provides €0.2m and obtains 75% of the shares, and business angels provide the rest of the equity and hold 25% of the capital.
Eight months later, the entrepreneur is in a position to sell the company for €2m. By how much has he multiplied his investment? And the business angels? Redo your calculations, assuming that the shareholders’ agreement in this case states that proceeds from the sale must first be allocated to the business angels until repayment of their investment before being shared among all of the shareholders, pro rata to the number of their shares. State your views.
1===+3. Using the data from the previous exercise, what is the amount of goodwill that is generated by the capital increase?
1===+4. A company issues 1 000 000 shares at €1 to the founders, and 800 000 shares at €10 to investors. Eighteen months later, it carries out a second capital increase in favour of an investment fund, which invests €5m, ending up with 36% of the capital. What is the breakdown of capital before and after the second capital increase, according to whether a full ratchet clause applies or not? State your views.
1===+5. A company issues 1 000 000 shares at €1 of which 200 000 are for the founders and 800 000 are for the investors. The investors grant the founders call options with an exercise price of €1 on a third of their stake, if the IRR obtained when they sell their shares is between 25% and 30%, on half of their stake if the IRR is between 30% and 35% and on two-thirds if it is higher than 35%. After five years, the investors have the opportunity to sell their shares for €3.7. 

1===+What is the IRR before and after the founders exercise their options? And if the sale price were €3.73? State your views. How can this be remedied?